No-Windows-Phone-8-Upgrade Decree No Good For Nokia

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Microsoft's upcoming Windows Phone 8 is poised to breathe new life into Windows-based phones, with new features for near-field communication, voice recognition and support for high-definition resolutions.

But Nokia may not be able to reap the benefits -- at least not with its Windows Phone 7.5-based Lumia smartphones. Microsoft said devices running the current or earlier iterations of its Windows Phone OS will not be able to fully upgrade to the new Windows Phone 8 platform, a move analysts predict could deal the already struggling Nokia a significant blow.

Malik Saadi, an analyst with Informa Telecoms & Media, believes sales of Nokia's current line of Lumia smartphones will suffer, as customers will likely hold off on purchasing a Windows Phone 7.5 device in anticipation of Windows Phone 8 devices launching later this year.

"Because Windows Phone 7 is not truly upgradeable to Windows Phone 8, this could have a negative impact on sales of existing Windows Phone 7 smartphones, Nokia's Lumia devices in particular. Operators and users will hold [off] until the new devices are in the market this coming autumn," Saadi wrote in a blog post Thursday. "This will have a serious impact on Nokia's financial performance the coming quarter as the company relies strongly on Windows Phones as the main platform for its smartphones."

"If Nokia does its job right consumers will want to upgrade to the next Lumias anyway so those models better come fast as 800 and 900 will stall," Milanesi tweeted Wednesday.

Upgrading from earlier Windows Phone platforms to Windows Phone 8 is not possible because the new OS was designed to run on hardware containing dual-core processors, which aren't found in many of the Windows Phone handsets on the market today.

That said, Microsoft is offering handset makers and current users on the Windows Phone 7.5 platform an interim Windows Phone 7.8 release, a trimmed-down version of Windows Phone 8. The update will deliver the same new start screen native to Windows Phone 8 but not the full suite of new features.

While Windows Phone 7.8 will give Nokia's Lumia lineup a new user interface, the update is minimal compared to the breadth of new functionality available with Windows Phone 8, Saadi wrote.

"Although the existing Windows Phone 7 will be upgraded to include some high-level features of WP8, the true capabilities of this platform will sparkle only when new enabled devices are launched," his blog post read.